Canada’s housing market finished 2020 with a bang – another record-setting month for both home sales and prices.
The number of existing properties that changed hands in December was 47 percent higher than in December of 2019, the largest year-over-year increase in 11 years, according to data released Friday by the Canadian Real Estate Association.
The benchmark price of a home, meanwhile, was 13 percent higher.
The last time Canada saw a similar real estate boom was back in 2016 and early 2017.
This time, though, the faster property appreciation isn’t happening in Vancouver and Toronto, two of Canada’s priciest markets, but in areas that were — at least until recently — affordable.
In Toronto’s suburbs of Durham and Halton, prices for detached, semi-detached and row houses have seen year-over-year price increases of around 20 percent, according to an analysis by John Pasalis of Toronto real estate brokerage Realosophy Realty.
In the Durham Region, for example, the median price of a single-family home has grown 24% from $641,000 in November 2019 to $795,000 a year later.
The pandemic has fueled an existing trend that saw urban dwellers flocking to the suburbs in search of larger, more affordable homes. Statistics Canada StatCan data shows that from early July 2019 to early July 2020, Toronto saw an additional 50,375 people leave the city for other parts of Ontario.
According to StatCan, Montreal saw a similar move of 24,880 people, although both cities still experienced a similar population growth thanks to immigrants from outside Canada.
Homebuyers looking for lower prices have also flocked to the Maritimes district, putting pressure on property prices there. Halifax, for example, saw 1,584 people from other provinces for the one year ending July 2020.
This trend is raising concerns about rapidly deteriorating housing affordability.
RBC economist Robert Hogue said in a report this week that while real estate activity may ease in certain regions of Canada and segments of the market, buyers are in popular locations. will likely continue to face stiff competition in 2021.
Economic challenges will continue to weigh on housing values in the Prairies and Newfoundland, while downtown apartment prices are likely to remain the same until 2021, in part due to the pandemic’s impact on immigration.
When it comes to larger homes and properties in smaller markets, Hogue expects conditions to continue in favour of sellers by 2021.
On the one hand, changing housing preferences, lower interest rates and higher household savings, along with improving consumer confidence as people begin to see the end of the pandemic, will demand “increases”.
On the other hand, home buyers will likely continue to have a limited number of homes to choose from.
The report concludes that strong demand coupled with limited supply will continue to push home prices up.
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